Lake Norman Real Estate’s June 2016 Market Report: Record Breaking!

Finally!!! After being teased with strong pending sales but disappointing closed sales numbers all spring, it all turned around in June. At 202 closed sales Lake Norman logged in the 3rd highest monthly sales since 2004! On top of this, as of today we have a high number of pending contracts as well. Let’s take a closer look:

* All data is from the Carolina Multiple Listing Service.

Some significant additional statistics for you:

“Distressed sales” (Foreclosures (REO’S), defaults, Short Sales) represented less than half of 1% of Lake Norman’s total home sales. With just 4 distressed closed sales for the entire month it is safe to say they really didn’t play a role in June at all. Distressed active listings currently comprise 1.2% of Lake Norman’s current total inventory of single family homes for sales. Clearly distressed sales continue to play an insignificant role in our Lake Norman real estate market.

Waterfront homes continue to under perform but they are selling more quickly and prices are increasing. Waterfront properties represented only 30.7% of our June closed sales. At the same time they currently comprise 46.3% of our active listings. The average sales price of a waterfront home in June was $870,498 which is up from May’s 769,242. The average price per square foot came in at $239.55. It took on average 71 days for a waterfront home to sell and they sold for 97% of the listing price. We currently have 96 waterfront homes under contract comprising 30.6% of our total homes under contract. Our waterfront homes’ months of inventory dropped to 7.7 so they are still in a buyer’s market overall but this varies quite a bit by price range. When really nice waterfront properties hit the MLS they are actually selling quickly.

21 new construction homes closed in June through our MLS but this does not reflect an accurate picture of new home sales since so many are custom or are purchased directly from the builders and therefore never enter the MLS. (In fact, this segment of the market may be skewing our Lake Norman home sales numbers quite a bit. I read a tax report of all sales in Mooresville several months ago and 1/3 of them were builders selling directly to buyers.). The average listing price vs sales price of new construction single family homes was 100%! There is very little if any wiggle room in new home prices. (But ask for all those great upgrades!) We currently have 81 new construction homes under contract in the MLS. The average sales price in June logged in at $599,164. The months of supply of active listings based on June sales stands at 8.9 so overall new construction homes are actually in a buyers’ market.

40.6% of Lake Norman’s June single family home sales were under $400,000, down from 50.3% last month.

55.4% of Lake Norman home sales in June were under $500,000, also down from 64.3% last month. The higher priced home sales picked up!

Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 313 is down from last month’s but a good deal higher than the past to years on the same date.

A closer look at the chart:

The number of Active Listings today in Lake Norman for the second month in a row is actually slightly higher than last year’s at the same time. Our absorption rate/months of supply of active listings is 5.1 which puts Lake Norman overall finally in a seller’s market over all. That said, within specific price ranges there are swings from a buyer’s market to a balanced to a seller’s market.

Under Contract Show (conditional sales), were UP 19% versus this time last year. The average price of our new contracts is an impressive 16% higher than last year’s and the average time an UCS listing was on the market remained at 89. UCS are homes that just went under contract (have an accepted offer) and still have financial and inspection contingencies. They represent future closed sales most likely in August/September. These kind of numbers would normally indicate that we should exceed 2015’s sales in the next few months but given our bumpy spring I am not completely sure.

Pending/Under Contract No Show sales were down 10%. These listings went under contract on average in only 63 days but the average price is actually 1% lower than last year’s. Pending sales are contracts that are past their inspection/due diligence periods and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. Given this lower number we may see total sales dip in July and then rise again in August.

Lake Norman’s closed June home sales in our MLS as of today and as stated above, were UP! While only 3% higher than last June’s, this is only the 3rd month in 12 years that we closed more than 200 in one month! Our total sales for the first 6 months of 2016 are now only 1.8% below 2015’s. The average sales price in June was up 12% versus last year and the average home took 77 days to sell which is 15% faster than last June’s. So, good properties are selling in less than 3 months yet our average active listing has been on the market for over 4 months. This is the crux of at least one of the problems in our Lake Norman housing market. Stale, over-priced listings or listings with weaknesses are sitting and buyers are pouncing on good new listings.

The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:

July 6. 2016: 313

June 6, 2016 344

May 6, 2016: 340

April 6, 2016: 297

March 6, 2016: 234

February 6, 2016: 207

January 6, 2015: 176

December 6, 2015: 202

November 6, 2015: 222

October 6,2015: 209

September 7, 2015: 268

August 6,2015: 286

July 6, 2015 287

June 6, 2015: 304

May 6, 2015: 313

April 6, 2015: 272

March 6, 2015: 228

February 6, 2015: 204

January 6, 2015: 154

December 6, 2014: 204

November 6, 2014: 221

October 4, 2014: 275

September 6, 2014: 272

August 6, 2014: 261

July 7, 2014: 268

Here is a breakdown by price-range of our June 2016 closed sales in Lake Norman

$90,800 – $99,999: 1-

$100,000 – $199,999: 12++

$200,000 – $299,999: 38++

$300,000 – $399,999 31–

(These price ranges represented 40.6% of our June home sales)

$400,000 – $499,999: 30+

$500,000 – $599,999: 26+

(These price ranges represented 27.7% of June’s sales)

$600,000 – $699,999: 19++

$700,000 – $799,999: 16+++

$800,000 – $899,999: 6

900,000 – $999,999: 4

(These price ranges represented 22.2% of June’s sales)

$1,000,000 – $1,499,999: 11+++

$1,500,000 – $1,999,999: 5+

$2 million+ : 3++

(#Solds $1 million+ = 9.4% of our total June sales compared to last month’s 6%)

The stand out price ranges in June were the $100,000 – $300,000’s, the trade-up price ranges, especially the $600,000-$800,000’s and the $1.0 million – $1.5 million. June was remarkable in that almost every price range that had previously been weak improved while previously strong niche prices slowed. Overall I am very pleased to see the trade-up price ranges of $400,000-$799,999 gain such momentum!

As I wrote last month, Lake Norman’s waterfront homes suffered greatly during the recession. With the disappearance of the foreclosures and short sales, there were several years where the greatest action was in the lowest priced waterfront tear-downs that had good water and to a lesser degree nice homes in higher price ranges with good water in good locations that were well priced. As this market evolves, prices are definitely going up despite rather tepid sales. My buyers are now willing to increase their price range when they realize how much better the options are when they do so. New listings with good water are selling more quickly than in the past. The improvement is slow but steady and the average $ per square foot now at $339.55. It is important for potential waterfront buyers to understand that there are fewer good options in the lower and trade-up price ranges so watch for new listings and act quickly. The lowest priced listings are mostly at the end of coves, can’t have docks or are in less desirable locations. Just as an FYI, I have sold several luxury home buyers waterfront lots this past year as an alternative to settling for a home that didn’t suit them or needed too much work. Prices are going up out of circumstances rather than overall market trends. For more details: Lake Norman Waterfront Home Sales 2005 – 2015, Some Interesting Insights.

As of today we have 96 waterfront properties under contract compared to 100 last month. Our months of supply based on June sales is down to 7.7 from 10.7 last month. Lake Norman waterfront homes over all remain in a buyer’s market. That said, the cream of the crop waterfront properties sell relatively quickly in all but the very high-end luxury price ranges. With our current market momentum it is more important than ever to know your price niche! Waterfront home buyers in the lower price ranges are going to have to lower their expectations and/or be willing to be more flexible. Keep in mind that the only finite property Lake Norman has is waterfront so supply and demand should drive prices up consistently in the future. I seriously believe that waterfront buyers should pounce when they find a good property with good water.

12-Year Comparison of Lake Norman Home Sales By Month

* Please note that all of my numbers are for single family homes. They come from the Carolina Multiple Listing Service and will not include sales that took place outside of our MLS.** I adjust past months when I do the monthly update as a few more sales are usually input late by agents. ***With our new MLS Matix program there are some variances in numbers but I am not going to go back to prior years and adjust.

I love this now 12-year chart of all of Lake Norman’s sales by month as it really gives us a good sense of where we are today and where we have been over the past 12 years. Look at those recession numbers and you can see just how far we fell and just how much we have recouped. 2015 exceeded all years back to 2006 so in sheer number of homes sold our Lake Norman housing market truly has recovered.

With 6 months in the books, our 2016 home sales are now only slightly below last year’s. As you can see above, we are up against a relatively high July sales of 174 in 2015. We certainly have enough properties under contract to match that number however given the pattern so far this year I am not sure whether we will reach it. However, based on our UCS numbers we should see some strong numbers in August. Our Lake Norman housing market has been a little more erratic this year compared to 2015. June was record breaking and exceptional but March and May were very disappointing. Those of us in the trenches, however, will tell you we are all crazy busy!

Summary and My Insight

Good signs/news remains almost the about the same as last month:

Thanks in part to Brexit, interest rates are still amazingly low and are expected to stay that way through the end of 2016!

The number of distressed homes for sale remain so low that they are truly irrelevant and did not play any perceptible role in our Lake Norman housing market.

New construction is definitely back. Custom and smaller groups of spec homes are popping up all over Lake Norman. Builders are telling me that they could built twice as many as they are if it weren’t for the shortage of qualified labor.

New listings in the lower price ranges that are in good condition and in desirable locations are selling within days of hitting the MLS.

June showed some much needed improvement in our trade-up and luxury markets

Economists are predicting stronger sales in the south this year and Realtor.com even ranks Charlotte as the #8th hottest market in 2016. They predict a 10% increase in sales and a 6.5% increase in the median prices.

Challenges/Weaknesses:

Waterfront prices are going up forcing potential buyers to consider raising their price ranges and acting more quickly

Our luxury price ranges, while showing signs of life, are still very much in a buyer’s market.

Lake Norman home prices are increasing in a rather inconsistent pattern and in different locations and price ranges.

Existing home sales are being challenged by new construction! In head to head competitions new construction usually wins which hurts resale homes in the same or similar communities.

Strict loan standards implemented during the recession are still making it more difficult for buyers to qualify despite some easing and modifications.

Finding the perfect home has become more difficult as sales improve. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are selling very quickly. Watching the “hot sheet” is once again a part of the buying process for some price ranges and locations. Don’t procrastinate when considering a new listing because they are selling quickly!

On the flip side, most higher-end properties are simply taking much longer to sell.

No matter how hard I try to provide you with the most accurate and insightful data, it is critical to know your own niche because there are so many variables in the Lake Norman housing market. Don’t assume all price ranges and locations are equal. You might be facing multiple offers and/or picked over inventory or you might not.

Final thoughts:

Last month I was frustrated and perplexed by Lake Norman’s 2016 erratic and sometimes contradictory statistics. Up until this month we have received mixed signals with strong numbers of under contract properties but some disappointing closed sales. June certainly made up for some of this but I am still lacking complete confidence in the rest of 2016. My best guess is that we will continue to have overall strong activity but with modest if any gains and up and down months.

As I wrote last month but I think is still valid: Always keep in mind that the real estate market in Lake Norman is extremely diverse. Make sure you know what is happening right now in your market niche. While your perfect home might come along, don’t wait too long and don’t dismiss a property if it isn’t perfect. Prioritize: Location, quality and depth of water (if waterfront buyer), lot and floor plan. Then, to determine a realistic price, use VERY RECENT comparable sales in your specific market niche. The selection may not be great but with interest rates near all time lows and prices rising it is still a great time to buy. With less than 1% of Lake Norman’s current listings being distressed (foreclosures, short sales etc.) don’t expect a “bargain” to come along at an unrealistic price.If you read my post:Really Cool Real Life Examples of Home Values Trends in Lake Normanyou will know that a lot of our new listings are selling VERY quickly and at higher prices. I feel that we have two different markets right now in Lake Norman. There are new listings that are priced right that are selling in just a matter of days and then there are the older listings and high-end luxury estates that are still struggling.

My Mantra: Don’t focus as much on the price as on the future marketability of the property. A bargain that has incurable issues that will make it difficult to sell in the future really isn’t a bargain at all. Be smart!